- Gold, silver rebounding after breaking key support
- Risk assets overriding traditional drivers
- Gold in a falling wedge, eyeing a topside break
- Silver’s hammer candle signals potential upside shift
Summary
Both Gold and Silver had a rough end to February, falling sharply after breaking technical support. However, Friday’s price action was far more reassuring for the bulls, hinting the bearish break may have already run its course. With precious metals tracking risk assets over the past fortnight, speculative market moves may be more influential than traditional drivers like the US dollar and bond yields this week.
Gold, Silver Riding Retail Wave?
Source: TradingView
Gold and silver showed little fundamental relationship with anything from the rates and FX universe in the second half of February. That’s evident in the correlation coefficients above with the US Dollar Index (green), US 10-year Treasury yields (yellow), and US 10-year real Treasury yields (blue) over the past 10 days. While their correlation with the latter two has been strong, it’s the exact opposite of what you’d normally expect from non-yielding assets.
Instead of reacting to traditional drivers, their stronger relationship with assets like Bitcoin and Nasdaq futures suggests they’ve been trading more like momentum-driven markets often favored by retail investors, rather than safe-haven or cyclical plays. While there’s no guarantee that will continue, it’s a consideration when assessing potential setups in the near term.
Gold: Countertrend Pullback Ripe for Reversal?
Source: TradingView
Gold is sitting in a falling wedge after last week’s rout, hinting at a potential topside break and a resumption of the broader bullish trend. The bounce from support at $2834.30 on Friday, coupled with RSI (14) breaking its downtrend earlier Monday, adds to the risk of such a move.
$2880 is a key level, given how much work gold did either side of it in February. A push above would confirm a bullish wedge breakout, bringing minor resistance at $2920 and the record high of $2956.20 into play. Below $2880, support may be found at $2834.30 and again at $2790.
Silver Bounce Boosts Bulls
Source: TradingView
Silver’s bearish wedge breakout may have run its course, with Friday’s rebound from key support at $31.00—where the 50DMA and former resistance converge—suggesting a shift in direction. While MACD hasn’t confirmed it yet, RSI (14) breaking its week-long downtrend hints at improving momentum.
With price action firming and Friday’s hammer candle flashing a bullish signal, the near-term bias has tilted higher. That case strengthens further if silver extends gains on Monday, completing a morning star pattern.
A quick glance at the chart shows silver’s tendency to gravitate toward big and half-big figures, putting $31.50, $32, $32.50, and $33 on the radar for those considering longs. Aside from the first, they screen as potential targets depending on risk tolerance. A stop beneath $31 would offer protection against reversal.